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BlackRock's Rieder 'reversed' trade that shorted dollar while favoring yen
March 9, 2016 / 5:23 PM / 2 years ago

BlackRock's Rieder 'reversed' trade that shorted dollar while favoring yen

South Korean won, Chinese yuan and Japanese yen notes are seen on U.S. 100 dollar notes in this picture illustration taken in Seoul, South Korea, December 15, 2015. REUTERS/Kim Hong-Ji

NEW YORK (Reuters) - BlackRock Inc’s (BLK.N) chief investment officer of global fixed income, Rick Rieder, said on Wednesday his team cut a February position they held shorting, or betting against, the U.S. dollar while betting on Japanese yen appreciation.

Now, he said, “we have reversed” and are now favoring the U.S. dollar.

Rieder said he does not believe U.S. stocks are undervalued “at all,” underscoring that his remarks at a conference yesterday that stocks could “maybe” go up five percent to 10 percent this year were not a prediction and that such a rally would be surprising.

In fact, according to Rieder, the “upside in equities is much more limited” as corporate cash flow moderates and the cost of financing moves such as share buybacks has increased, ending what Rieder called “the greatest arbitrage in history.”

The BlackRock Strategic Income Opportunities Fund (BASIX.O), a mutual fund managed by Rieder that enjoys wide latitude in picking investments, cut all of its net exposure to the euro, Japanese yen and British pound in February, according to a BlackRock report released on Tuesday.

Rieder said his team has increased its portfolios’ exposure to high-yield debt and emerging markets to boost yields as fixed-income markets are starved by low, and in some cases, negative rates.

New York-based BlackRock oversaw $4.6 trillion in assets globally as of Dec. 31, 2015, with a third of those held in fixed-income products.

Reporting by Trevor Hunnicutt; Editing by Chizu Nomiyama and Alan Crosby

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